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For a look into a company’s sales trends, one idea is to consider their growth in inventory over time. Comparing this to growth in revenue could show some interesting results.

We ran a screen on the retail industry for stocks with positive trends in inventory: Growth in quarterly revenue outpacing growth in quarterly inventory year-over-year. We also screened for companies with quarterly inventory decreasing as a percent of current assets.

To understand why these trends are positive, think of why the opposite trends would be negative. If revenue were growing slower than inventory, it may indicate that the company is having trouble selling its inventory – although this could just indicate inventory building or a change in sales policies.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the top six stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.‬


We also created a price-weighted index of the stocks mentioned below and monitored the performance of the list relative to the S&P 500 index over the last month. To access a complete analysis of this list's recent performance, click here.

Do you think these companies have strong sales trends? Use this list as a starting point for your own analysis.

List sorted by difference between growth in revenue and inventory.

1. Movado Group, Inc. (MOV): Designs, sources, markets and distributes fine watches and jewelry. Market cap of $426.29M. MRQ revenue has increased 15.95% ($142.62M vs. $123M y/y) while MRQ inventory has decreased 15.34% ($176.09M vs. $207.99M y/y). Inventory/current assets has decreased from 53.32% to 40.59%, comparing 3 months ending 2011-10-31 to 3 months ending 2010-10-31. It has been a rough couple of days for the stock, losing 9.85% over the last week. The stock has had a good month, gaining 10.88%.

2. Crocs, Inc. (CROX): Engages in the design, development, manufacture, marketing and distribution of footwear, apparel and accessories for men, women and children. Market cap of $1.31B. MRQ revenue has increased 27.50% ($274.9M vs. $215.6M y/y) while MRQ inventory has increased 6.02% ($151.11M vs. $142.53M y/y). Inventory/current assets has decreased from 34.78% to 28.27%, comparing 3 months ending 2011-09-30 to 3 months ending 2010-09-30. It has been a rough couple of days for the stock, losing 7.74% over the last week.

3. Genesco Inc. (GCO): Operates Journeys, Journeys Kidz and Shi by Journeys stores that offer footwear for young men, women and children. Market cap of $1.40B. MRQ revenue has increased 32.63% ($616.52M vs. $464.84M y/y) while MRQ inventory has increased 20.67% ($544.1M vs. $450.9M y/y). Inventory/current assets has decreased from 78.34% to 76.85%, comparing 13 weeks ending 2011-10-29 to 13 weeks ending 2010-10-30. The stock is a short squeeze candidate, with a short float at 9.5% (equivalent to 6.27 days of average volume). The stock has gained 55.02% over the last year.

4. True Religion Apparel Inc. (TRLG): Designs, develops, manufactures, markets, distributes and sells apparel in North America, Europe, Asia, Australia, Africa and South America. Market cap of $864.44M. MRQ revenue has increased 16.83% ($108.36M vs. $92.75M y/y) while MRQ inventory has increased 4.93% ($54.1M vs. $51.56M y/y). Inventory/current assets has decreased from 23.0% to 19.25%, comparing 3 months ending 2011-09-30 to 3 months ending 2010-09-30. The stock is a short squeeze candidate, with a short float at 7.46% (equivalent to 5.65 days of average volume). The stock has gained 44.65% over the last year.

5. Bebe Stores, Inc. (BEBE): Engages in the design, development and production of women's apparel and accessories. Market cap of $687.51M. MRQ revenue has increased 9.55% ($126.27M vs. $115.26M y/y) while MRQ inventory has decreased 1.19% ($37.34M vs. $37.79M y/y). Inventory/current assets has decreased from 16.81% to 14.85%, comparing 3 months ending 2011-10-01 to 3 months ending 2010-10-02. The stock has gained 39.42% over the last year.

6. Best Buy Co. Inc. (BBY): Operates as a retailer of consumer electronics, home office products, entertainment products, appliances and related services primarily in the United States, Europe, Canada and China. Market cap of $8.17B. MRQ revenue has increased 1.76% ($12,099M vs. $11,890M y/y) while MRQ inventory has decreased 8.39% ($9,220M vs. $10,064M y/y). Inventory/current assets has decreased from 67.87% to 57.95%, comparing 13 weeks ending 2011-11-26 to 13 weeks ending 2010-11-27. It has been a rough couple of days for the stock, losing 19.63% over the last week.

7. Foot Locker, Inc. (FL): Operates as a retailer of athletic footwear and apparel. Market cap of $3.47B. MRQ revenue has increased 8.91% ($1,394M vs. $1,280M y/y) while MRQ inventory has increased 0.17% ($1,204M vs. $1,202M y/y). Inventory/current assets has decreased from 63.10% to 58.47%, comparing 13 weeks ending 2011-10-29 to 13 weeks ending 2010-10-30. It has been a rough couple of days for the stock, losing 8.45% over the last week.

8. PetSmart, Inc. (PETM): Operates as a specialty retailer of products, services and solutions for pets in North America. Market cap of $5.62B. MRQ revenue has increased 7.89% ($1,497.56M vs. $1,388.07M y/y) while MRQ inventory has increased 2.93% ($708M vs. $687.83M y/y). Inventory/current assets has decreased from 60.26% to 56.20%, comparing 13 weeks ending 2011-10-30 to 13 weeks ending 2010-10-31. The stock has gained 26.23% over the last year.

9. Finish Line Inc. (FINL): Operates as a mall-based specialty retailer in the United States. Market cap of $1.07B. MRQ revenue has increased 10.11% ($331.51M vs. $301.07M y/y) while MRQ inventory has increased 5.90% ($229.84M vs. $217.04M y/y). Inventory/current assets has decreased from 44.53% to 43.18%, comparing 13 weeks ending 2011-08-27 to 13 weeks ending 2010-08-28. The stock is a short squeeze candidate, with a short float at 11.87% (equivalent to 6.34 days of average volume). The stock has gained 14.59% over the last year.

*Accounting data sourced from Google Finance, all other data sourced from Finviz.

Source: 9 Retail Stocks With Encouraging Inventory Trends